Correlation Between Swiss Prime and Warteck Invest

Can any of the company-specific risk be diversified away by investing in both Swiss Prime and Warteck Invest at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Swiss Prime and Warteck Invest into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Swiss Prime Site and Warteck Invest, you can compare the effects of market volatilities on Swiss Prime and Warteck Invest and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Swiss Prime with a short position of Warteck Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Prime and Warteck Invest.

Diversification Opportunities for Swiss Prime and Warteck Invest

0.45

Correlation Coefficient

Swiss Prime  Warteck Invest

Very weak diversification

The 3 months correlation between Swiss and Warteck is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Prime Site and Warteck Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warteck Invest and Swiss Prime is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Swiss Prime Site are associated (or correlated) with Warteck Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warteck Invest has no effect on the direction of Swiss Prime i.e., Swiss Prime and Warteck Invest go up and down completely randomly.

Pair Corralation between Swiss Prime and Warteck Invest

Assuming the 90 days trading horizon Swiss Prime is expected to generate 1.88 times less return on investment than Warteck Invest. In addition to that, Swiss Prime is 1.33 times more volatile than Warteck Invest. It trades about 0.12 of its total potential returns per unit of risk. Warteck Invest is currently generating about 0.31 per unit of volatility. If you would invest  186,000  in Warteck Invest on October 5, 2024 and sell it today you would earn a total of  5,500  from holding Warteck Invest or generate 2.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Swiss Prime Site  vs.  Warteck Invest

Swiss Prime Site

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Swiss Prime Site has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Swiss Prime may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Warteck Invest

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Warteck Invest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Warteck Invest may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Swiss Prime and Warteck Invest

The main advantage of trading using opposite Swiss Prime and Warteck Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Prime position performs unexpectedly, Warteck Invest can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Warteck Invest will offset losses from the drop in Warteck Invest's long position.

The idea behind Swiss Prime Site and Warteck Invest pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.